Too much too soon for blundering HMRC's new tax system -

Exchequer secretary David Gauke has confirmed that Her Majesty's Revenues and Customs will proceed with a controversial Real Time Information scheme for tax payment.

In an answer to a written parliamentary question the tax secretary confirmed that “good progress” has been made with the system that is absolutely pivotal to the secretary of state for the Department of Work and Pensions (DWP), Iain Duncan Smith’s prized Universal Credit scheme in 2013.

“I expect HMRC to be in a position to pilot the Real Time Information system with employers, pension providers and payroll bureaux from the spring of 2012,” the minister said.

The system will involve the real-time collection of tax data and other deductions on an automatic basis with payments being made as employees are paid, as well as doling out IDS’s meagre handouts to UK citizens.

So far a public consultation on the subject has been completed, although HMRC seems to have fingers wedged firmly in ears over the amount of time the scheme is likely to take to successfully implement.

What is proving controversial is that experts believe the time being put aside to piece together the incredibly important data system, which will be massive in scale, is nowhere near adequate.

In basic terms HMRC appears to have been forced by the DWP to give guarantees that the system will be in place ahead of the October 2013 deadline for Universal Credits - regardless of how long it actually takes to implement.

“RTI is a key component in the DWP plans for the introduction of Universal Credits from 2013,” the public consultation document stated.

“To support DWP’s plans, RTI will be introduced from Spring 2012.”

Although trials are set to begin in April 2012, as Gauke states, this will only involve more basic testing with a proper live trial not beginning until January of 2013.

Before anything begins the scope of the project will be shown to Capgemini, the lucky firm which will be tasked with putting the project in place, although we imagine it will be rewarded handsomely.

According to Matthew Brown, Technical Officer at the Chartered Institute of Taxation, this is nowhere near enough time to complete such a massive project, with timescales being set by political agendas.

“This is less of a tax decision and more to do with government department’s wishes as this is all based around universal credit proposals,” he told TechEye.

“We are certainly concerned that there is not enough time to prepare for such a project, as most projects would need at least 18 months to prepare the software according to developers, while only one year is being given to get it right before live tests begin.”

Payroll software needs to be extensively checked, reviewed and signed off externally says Brown, and there is little time to achieve everything adequately.

Furthermore, the time from trials by larger firms in January 2013 up until the deadline for universal credits in October that year is much too short to resolve problems that will inevitably arise in such a large project.

“It is a tall order and it means that there is absolutely no room for errors in the system,” says Brown.

And if the past project by HMRC to move tax forms online is anything to go by, then there is a slim chance of everything going right first time for RTI, with a full year taken to iron out problems of the comparatively simple previous project.

Indeed, that particular project was given a full five years to be thoroughly tested and put in place.

And given HRMC’s propensity for large tax cock-ups, such as when the department demanded around £2 billion in overpaid tax back from citizens, there is little reason to believe that the scheme will avoid potential failings such as being able to successfully connect to employees' own software, as is feared.

Paul Alpin, of the Institute of Chartered Accountants in England and Wales told TechEye: "It is an incredibly ambitious project. And it is only feasible if absolutely everything goes right the whole way down the system the first time with everything.

"Not only is it a huge step in integrating tax and benefits but implementing the RTI is actually a very different approach to IT than HMRC has used in the past so there is certainly a massive concern that this is not going to work on time."